Gold prices on track to mark biggest weekly drop in six weeks
19 January 2024 - 08:02
byHarshit Verma
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Confiscated gold is displayed during an operation against illegal mining. Picture: UESLEI MARCELINO/REUTERS
Gold prices were headed to mark their biggest weekly drop in six on Friday, driven by a robust dollar and higher bond yields as US central bankers pushed back against expectations of early rate cuts amid signs of resilience in the economy.
Spot gold was little changed at $2,022.07/oz by 4.04am GMT, but has fallen 1.3% so far in the week. US gold futures rose 0.1% to $2,024.10.
Bullion was under pressure as traders repriced their rate-cut expectations, after better than expected data and hawkish Fed speakers, Hugo Pascal, a precious metals trader at InProved, said.
The repricing offset safe-haven premium from geopolitical risks in the Middle East, Pascal said, adding that “as long as gold holds above $2,000 level, I remain positive on the metal.”
The US dollar index was down 0.2% for the day but up nearly 1% so far this week. A stronger dollar makes greenback-denominated gold more expensive for foreign currency holders.
Yields on the benchmark US 10-year Treasury notes touched a fresh five-week high of 4.1710%.
Atlanta Federal Reserve president Raphael Bostic said he was open to lower rates sooner than he had anticipated, depending on how quickly inflation falls, but that the baseline was for rate cuts to start in the third quarter.
Markets were betting on 139 basis points (bps) of Fed rate cuts this year, down from 150 bps a week earlier, according to LSEG’s interest rate probability app, IRPR.
The odds of a Fed rate cut in March have dropped to 54% from about 71% last week, according to IRPR.
Lower interest rates decrease the opportunity cost of holding bullion.
Spot silver fell 0.3% to $22.68/oz, platinum climbed 0.2% to $909.06 and palladium gained 0.7% to $944.63.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Gold heads for weekly fall as dollar rises
Gold prices on track to mark biggest weekly drop in six weeks
Gold prices were headed to mark their biggest weekly drop in six on Friday, driven by a robust dollar and higher bond yields as US central bankers pushed back against expectations of early rate cuts amid signs of resilience in the economy.
Spot gold was little changed at $2,022.07/oz by 4.04am GMT, but has fallen 1.3% so far in the week. US gold futures rose 0.1% to $2,024.10.
Bullion was under pressure as traders repriced their rate-cut expectations, after better than expected data and hawkish Fed speakers, Hugo Pascal, a precious metals trader at InProved, said.
The repricing offset safe-haven premium from geopolitical risks in the Middle East, Pascal said, adding that “as long as gold holds above $2,000 level, I remain positive on the metal.”
The US dollar index was down 0.2% for the day but up nearly 1% so far this week. A stronger dollar makes greenback-denominated gold more expensive for foreign currency holders.
Yields on the benchmark US 10-year Treasury notes touched a fresh five-week high of 4.1710%.
Atlanta Federal Reserve president Raphael Bostic said he was open to lower rates sooner than he had anticipated, depending on how quickly inflation falls, but that the baseline was for rate cuts to start in the third quarter.
Markets were betting on 139 basis points (bps) of Fed rate cuts this year, down from 150 bps a week earlier, according to LSEG’s interest rate probability app, IRPR.
The odds of a Fed rate cut in March have dropped to 54% from about 71% last week, according to IRPR.
Lower interest rates decrease the opportunity cost of holding bullion.
Spot silver fell 0.3% to $22.68/oz, platinum climbed 0.2% to $909.06 and palladium gained 0.7% to $944.63.
Reuters
Gold slides further after Fed’s hawkish comments
Gold gains on rising Middle East tensions
Softer dollar supports gold
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